Tech, Startups, Capital, Ideas.

It’s all too easy for investors to hand out pithy messages like “manage what you can control” and “focus on quality.” This is advice they obviously should have been giving their startups all along.

Like the founders of portfolio companies Infusionsoft, hi5, and PBWiki, to name just a few, I learned how to run lean and mean while bootstrapping, before raising venture capital. Many entrepreneurs who haven’t bootstrapped may have learned similar lessons, but there’s no substitute for the learning that comes from bootstrapping.

There’s also no one size fits all set of rules for building a great company. Scarcity of resources creates immediate focus. Focus wins. But capital enables speed and scale. Navigating the difficult path between capital and scarcity is an art that is company and entrepreneur-specific.

With that in mind, I sat down with Clate Mask, CEO of fast-growing Infusionsoft, to find out what he’d learned from bootstrapping. Here’s what he shared with me:

• Focus more on revenue than on product.  It pains me to say it, but the better mousetrap does not sell.  The whole company needs to be aligned to drive revenue (which will offend some non-sales folks, who will wonder if they’re second-class citizens).  Build a zero-based budget.  Be aggressive in sales.  Expand expenses as revenue expands; make it a reward for employees.
• Build the business incrementally.  We all want to build the best product, process, team, etc. TODAY, but that’s not a wise use of capital and you won’t get the ROI you need for quarters or years down the road.  The less capital you have, the more immediately you need ROI-measured in days, not months, quarters or years.  Sounds easy, but I’ve found few people do this.  This skill comes down to understanding WHAT to invest in today and what you need to wait to invest in next week, month, quarter or year.
• Hire slow.  Easy to say, but human nature wants to bring “help” on board as fast as possible to ease the pain.  Get used to the pain.  Only hire when you absolutely have to.  Hire people who are optimistic, energetic and adaptive… and have a high pain tolerance.  Most people in start-up or growth stage hem and haw over a $100k capital expense, but hire a new $100k (per year) employee in a heartbeat.  I love employees, but it’s important to remember they are recurring expenses, so they need to deliver ROI on an ongoing basis.  If they’re not delivering, you’ve gotta let them go.
• FOCUS the strategy and operations.  Know your BHAG, align everything with it, and connect your strategy to your operations.  A great resource to help you do that is www.gazelles.com and Verne Harnish’s book, Mastering the Rockefeller Habits.  This helps you develop the rhythm in your business that comes from annual, quarterly, monthly, weekly and daily meetings that enhance focus and eliminate waste.
• Teach frugality to everyone.  Set the example as the leader.  If you are indulgent, your executive team will be… and so will the rest of the employees.  Understand that a dollar saved multiplies very fast in your hi-growth company.  Make it easy for people to see by teaching them a dollar saved is really $10 saved.